Cooper v. Ruane Cunniff & Goldfarb Inc., No. 17-2805 (2d Cir. 2021)Annotate this Case
The Second Circuit reversed the district court's order compelling arbitration of plaintiff's claims for breach of fiduciary duty under section 502(a)(2) of the Employee Retirement Income Security Act of 1974 (ERISA). Plaintiff filed suit in 2016 as representative of an ERISA Plan and its participants, alleging that Ruane, a third-party investment manager and plan administrator retained by plaintiff's employer, DST, mismanaged the assets of DST's 401(k) profit-sharing fund, causing it to lose substantial value.
The court concluded that plaintiff's ERISA claims for breach of fiduciary duty are not properly understood to be "related to" his employment because none of the facts he would have to prove to prevail on his claims pertain to his employment. Furthermore, other individuals and entities that were never employed by DST could have brought identical claims, including other Plan beneficiaries, the Secretary of Labor, and DST itself. Moreover, the court explained that Congress explicitly authorized plan beneficiaries and others to sue individual fiduciaries in federal court for breach of their duties under ERISA: to interpret the Arbitration Agreement as mandating arbitration of ERISA fiduciary claims would unacceptably undercut the viability of such actions. Therefore, this result is neither required by the Arbitration Agreement's express language nor acceptable in light of ERISA's protective purposes.